ECONOMY

Sense of urgency arises over aid

A decision on granting aid to Greece is needed quickly, the heads of the European Central Bank (ECB) and International Monetary Fund said yesterday, but did not confirm reports that the bailout package could balloon to 120 billion euros over three years. A sense of urgency arose in Berlin yesterday, with Spain being the latest eurozone member to see its credit rating lowered. «We hope that the negotiation will not take too much time, that it can be done rather rapidly. But until this time it’s impossible to give any details on what will be finally agreed in the future,» Dominique Strauss-Kahn, the IMF’s managing director, told a news conference after talks with German politicians. «It’s impossible to give any details on what will be finally agreed.» ECB and IMF officials are in Athens negotiating a three-year fiscal austerity plan as a condition for releasing emergency loans to Greece. Earlier, opposition members of Germany’s parliament said Strauss-Kahn had told them a eurozone-IMF aid package for Greece will be worth 100-120 billion euros over three years. At the news conference, Strauss-Kahn declined to comment on those figures. ECB President Jean-Claude Trichet said negotiations with Greece over what was required for help to be granted should be concluded within a few days. «I make the working assumption that this green light has been given, depending on the program itself, then we have an absolute necessity to decide very rapidly,» he told the same news conference, adding that fast-track approval by Germany’s parliament was crucial. Meanwhile, Standard & Poor’s turned its attention yesterday to Spain, cutting its rating to AA from AA+ amid concerns about the country’s growth prospects following the collapse of a construction bubble. «We now believe that the Spanish economy’s shift away from credit-fueled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed,» Standard & Poor’s credit analyst Marko Mrsnik said. Spain is considered the key to whether Europe’s debt crisis can be resolved – its economy is much larger than that of Greece and Portugal and, many in the markets postulate, may be just too big to bail out if it gets into serious trouble. ‘Far too much time wasted,’ says OECD Too much time has been lost in the Greek debt crisis due to inaction, causing financial markets to react negatively, OECD Secretary-General Angel Gurria said yesterday. Gurria told German radio that, rather than pointing the finger at other countries, it was important to take decisive action now. «The question isn’t ‘How much time until the help will be made available?’ but rather ‘How much time has already gone?’» said Gurria. «Far too much time has been wasted on inaction,» Gurria added. «We should have intervened two or three months ago. The markets have developed negatively since then, unnecessarily.» Meanwhile, AEGON Asset Management has accused the European Union, International Monetary Fund and the Greek and German governments of demonstrating a «lack of leadership» in putting together a rescue package for the country. «There has been an awful lot of dithering and lack of decisive action and that is why the market has got impatient,» Bill Dinning, who helps look after about $61 billion as head of strategy at AEGON NV’s fund unit in Edinburgh, told Bloomberg.